Session 7: Financial Reporting and Analysis: An Introduction
Reading 29: Financial Statement Analysis: An Introduction
LOS f: Describe the steps in the financial statement analysis framework.
In the financial statement analysis framework, using the data to address the objectives of the analysis and deciding what conclusions or recommendations the information supports is best described as:
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analyzing and interpreting the data. | |
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reporting the conclusions. | |
The financial statement analysis framework consists of six steps:
- State the objective and context. Determine what questions the analysis is meant to answer, the form in which it needs to be presented, and what resources and how much time are available to perform the analysis.
- Gather data. Acquire the company’s financial statements and other relevant data on its industry and the economy. Ask questions of the company’s management, suppliers, and customers, and visit company sites.
- Process the data. Make any appropriate adjustments to the financial statements. Calculate ratios. Prepare exhibits such as graphs and common-size balance sheets.
- Analyze and interpret the data. Use the data to answer the questions stated in the first step. Decide what conclusions or recommendations the information supports.
- Report the conclusions or recommendations. Prepare a report and communicate it to its intended audience. Be sure the report and its dissemination comply with the Code and Standards that relate to investment analysis and recommendations.
- Update the analysis. Repeat these steps periodically and change the conclusions or recommendations when necessary.
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发表于 2011-3-12 10:24
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